Date Of Judgment 03-07-2018 I.t.a v. M/S. Csr India Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU.DATED THIS THE QO DAY QF JULY ZO1LSPRESENT THE HON'BLE Dr.JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHAI.T.A.No.1010/2017 BETWEEN: 1.THE PR. COMMISSIONER OF INCOME-TAX, CIT{(A)5[‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BENGALURU-560 OOD.5[‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BENGALURU-560 OOD. 2.THE INCOME-TAX OFFICKRWARD-11(1), PRESENT ADDRESSWARD-2(1)(1), 2 KFLOOR|WARD-11(1), PRESENT ADDRESSWARD-2(1)(1), 2 KFLOOR| BMTC BUILDING, 80 FEET ROAD KORMANGALA, BENGALURU-5S60 O95. _. APPBLLANTS| (By Mr. ARAVIND K.V. ADV.) AND: M/S. CSR INDIA PVT. LTD.,No.4/1, 11[‘L]FLOOR, TOWER-C|IBC KNOWLEDGE PARKBANNBRGHAITIA ROADBENGALURUPAN: AABCU 47145. _. RESPONDENT (By Mr. ANKUR PAI DHUNGAT, ADV.) THIS LT.A IS FILED UNDER SECTION 260-A OF IT. ACT,1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONSOF LAW STATED ABOVE. ALLOW THR APPBAL AND SET ASIDETHR ORDBRS PASSBED BY THR [INCOMB TAX APPELLAT Date of Judgment 03-07-2018 I.T.A.No.1010/2017 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. CSR India Pvt. Ltd., TRIBUNAL, BENGALURU IN IT(TP)A No.58/Bang/2014 DATED06/04/2017 ANNEXURE-D CONFIRMING THE ORDER OF THE.DRP AND CONFIRM THER ORDER PASSED BY THE INCOME TAXOFFICER, WARD-2(1)(1), BENGALURU & ETC. THIS I.T.A. COMING ON FOR ORDERS, THIS DAY |Dr. VINEET KOTHARIJ. DELIVERED THE FOLLOWING :- JUDGMENT Mr. Aravind K.V.Adv. for Appellants -RevenueMr. Ankur Pai Dhungat,Adv. for Respondent -Assessee 1. The Appellants-Revenue have filed this appealu/s.260Aof the Income Tax Act, 1961, raisingpurportedly certain substantial questions of law arisingfrom the order oft theITAT, Bengaluru Bench ‘B’,Bengaluru, dated06.04.2017passed inIT(TP)ANo.58/Bang/2014(Income Tax Officer vs. M/s.CSR|India Put. Ltd.,)for.A.Y.2009-10. 2. The proposed substantial questions of lawframed1n theMemorandumoT|appealby theAppellants-RevenueaTe€quotedbelowfor.readyreterence:- 3/8 “(1) Whether on the facts and in the|circumstances of the case, the Tribunal ts right in|law in excluding certain comparable on theground offunctional dissimilarity even when thequalitative and quantitative filters are satisfied in|case of assessee?| (2) Whether on the facts and in thecircumstances of the case, the Tribunal has erredis not following its own decision in the case ofM/s. Societe General Global Solution Centre (P)Ltd., Vs. DCIT, Cuircle-12(3), Bangalore videIT(TP)A No. (Bang) the jurisdictional TribunalBangalore has opined that the turnover cannot be|relevant criteria in a service sector where fixedoverheads are nominal and the cost of service isin direct proportion to the services rendered? (3) Whether on the facts and in thecircumstances of the case, the Tribunal ts right in|confirming the directions of DRP with regard toinclusion of comparable namely FCS Softwaresolutions and Think Soft Global Services Ltd ascomparables by following its earlier order whichhas not reached finality and even when thetransfer pricing officer had rightly rejected thesaid comparable’s on the basis of working capitaladjustment in those cases exceeded 4% and the DRP had erroneously held that there should notbe capping and WCA should be on actual?” 3. Learned counsel for the Appellants-Revenue Mr.K.V.Aravind submits that he does not press thesubstantial questions of law Nos. 1 and 2. Hissubmission 1s recorded. 4. The learned Tribunal, after discussing the rivalcontentions of both the Appellants-Revenue and theRespondent-assessee, has given the following findingsagainst Revenue with regard to various issues raisedbefore it with regard to‘Transfer Pricing’and‘Transfer| PricingAdjustments’madebytheconcerned|authorities below. We consider it appropriate to quotethe relevant portion hereunder:- | Regarding substantial question of law No.3- !. The DR submitted that the DRP erred in'directing to include FCS Software Solutions andThink Soft Global Services Ltd as comparables as 3. Learned counsel for the Appellants-Revenue Mr.K.V.Aravind submits that he does not press thesubstantial questions of law Nos. 1 and 2. Hissubmission 1s recorded. 4. The learned Tribunal, after discussing the rivalcontentions of both the Appellants-Revenue and theRespondent-assessee, has given the following findingsagainst Revenue with regard to various issues raisedbefore it with regard to‘Transfer Pricing’and‘Transfer| PricingAdjustments’madebytheconcerned|authorities below. We consider it appropriate to quotethe relevant portion hereunder:- | Regarding substantial question of law No.3- !. The DR submitted that the DRP erred in'directing to include FCS Software Solutions andThink Soft Global Services Ltd as comparables as Date of Judgment 03-07-2018 I.T.A.No.1010/2017 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. CSR India Pvt. Ltd., 5/8 per the above appeal grounds. The AR placedreliance on the decision of the DRP and Logica P. Ltd v. DCIT |(2016) 68 taxmann.com = 19(Bangalore — Trib). The relevant portion of theorder 1s extracted as under: NXXXXX It is seen that the TPO excluded them on|the basis that the working capital adjustment inthose cases exceed 4%. The DRP held thereShould not be capping and the working capitaladjustment should be on actual and accordinglydirected to include these comparable. Since, theDRP adtirections are in accordance with thiTribunal’s decision in the case of Moog Controls(India)PrivateLimited[|IT(TPJANo.551/Bang/ 2015 it needs to be upheld. Further,this Tribunal found them to be comparables,supra, and hence we reject the Revenue’s appeal. 5. This Court inITA No.536/2015 C/w ITA. No.537/2015deliveredOT] 25.06.2018 | (Pri. Commissioner of Income Tax & Anr. Vs. |M/s. Softbrands India Pvt. Ltd.,}| has held that inthese type of cases, unless an|ex-facleperversity in the Date of Judgment 03-07-2018 I.T.A.No.1010/2017 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. CSR India Pvt. Ltd., 6/8 findings of the learned Income Tax Appellate Tribunal isestablished by the appellant, the appeal at the instanceof an assessee or the Revenue under|Section 260-Aot|the Act is not maintainable. The relevant portion of the said judgment is. quoted below for ready reference: § Conclusion: 55. A substantial quantum of internationaltrade and transactions depends upon the fair andquick judicial dispensation in such cases. Had itbeen|OmCaASeofSubstantialquestionofinterpretation of provisions of Double TaxationAvoidance Treaties (DIAA), interpretation ofprovisions of the Income Tax Act or OverridingEffectoftheTreatiesOVECTthe|Domestic.Legislations or _ the questions like TreatyShopping, Base Erosion and Profit Shifting(BEPS), Transfer of Shares in Tax Havens (like inthe case of Vodafone etc.), tf based on relevantfacts, such substantial questions of law could |be raised before the High Court underSection|260-A|of the Act, the Courts could haveembarked upon such exercise of framing andanswering such substantial question of law. On Date of Judgment 03-07-2018 I.T.A.No.1010/2017 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. CSR India Pvt. Ltd., the other hand, the appeals of the present tenoras to whether the comparables have been rightlypicked up or not, Filters for arriving at the correctlist of comparables have been rightly applied ornot, do not in our considered opinion, give rise toany substantial question of law. 56. We are therefore of the consideredopinion that the present appeals filed by theRevenue do not give rise to any substantialquestion of law and the suggested substantialquestions of law do not meet the requirements ofSection 260-A.of the Act and thus the appealsfiled by the Revenue are found to be devoid ofmerit and the same are liable to be dismissed. | Date of Judgment 03-07-2018 I.T.A.No.1010/2017 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. CSR India Pvt. Ltd., the other hand, the appeals of the present tenoras to whether the comparables have been rightlypicked up or not, Filters for arriving at the correctlist of comparables have been rightly applied ornot, do not in our considered opinion, give rise toany substantial question of law. 56. We are therefore of the consideredopinion that the present appeals filed by theRevenue do not give rise to any substantialquestion of law and the suggested substantialquestions of law do not meet the requirements ofSection 260-A.of the Act and thus the appealsfiled by the Revenue are found to be devoid ofmerit and the same are liable to be dismissed. | 57. We make it clear that the same'|yardsticks and parameters will have to beapplied, even tf such appeals are filed by theAssessees, because, there may be cases wherethe Tribunal giving its own reasons and findingshas found certain comparables to be goodcomparables to arrive at an‘Arm’s LengthPrice“in the case of the assessees with whichthe assessees may not be satisfied and have filedsuch appeals before this Court. Therefore weclarify that mere dissatisfaction with the findingsoffacts arrived at by the learned Tribunal is not Date of Judgment 03-07-2018 I.T.A.No.1010/2017 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. CSR India Pvt. Ltd., at all a sufficient reason to invokeSection 260-Aof the Act before this Court. o8. The appeals filed by the Revenue are)therefore dismissed with no order as to costs.” 6. Having heard the learned counsels for theparties, we are therefore of the opinion that nosubstantial question of law arises in the present case also. The appeal filed by the Appellants-Revenue is liable to be dismissed and it is,*"?*""-,accordingly No costs. Srl. Sd/-. JUDGE Sd/-|JUDGE| JUDGE|